Oil prices are rising early Friday and there is better than expected data from Germany and Microsoft, yet in the big picture, there are those that are saying that oil prices have risen in recent months not due to speculation but what we should call precautionary demand. According to Dow Jones U.S. sanctions against Iran are hurting growth in that country and creating precautionary demand for oil, which is part of the reason oil prices remain at current high levels according to Caroline Freund, the World Bank's chief economist for the Middle East and North Africa.

In other words, countries have been hoarding oil in the event that oil supply might get cut. This has increased demand and prices have gone higher. It is a valid fundamental reason for oil prices to rise and has been a major factor in the pricing oil. The rise is not due to speculators, as the uninformed would have you believe, but the physical buying of extra barrels. As the Iran risk seems to be pushed back that buying has eased a bit.

Dow Jones reported overnight that European Union member states have agreed to postpone by one month the deadline for a review of the oil embargo on Iran. The EU agreed in January to implement a full oil embargo on Iranian crude oil exports by July 1 in response to its nuclear program. But as a concession, to Greece in particular, it agreed to hold by May 1 a review of the effect of a full embargo. That left next Monday's Foreign Affairs Ministers Summit as the last opportunity to agree any change to the embargo.

However, following discussions among member states this week, Greece said it currently believed it would be able to handle the embargo. But it asked for the opportunity to revisit the issue, if necessary, in coming weeks and other member states agreed. Member states have agreed to postpone the May 1 review deadline until June 1.

Yet at the same time Dow Jones newswires reported that, Iran has halted oil exports to Germany Iranian state broadcaster Press TV reported on its website, a day after a similar report about its supplies to Spain. The broadcaster Tuesday, citing people familiar with the situation, reported that Iran was considering cutting oil sales to Germany and Italy after having halted sales to Spain. Spokespeople for Germany's federal economics ministry couldn't immediately comment on the matter Wednesday. The impact on the German economy from any halted oil imports from Iran, however, should be limited given that Iranian oil deliveries account for only a fraction of total imports. In January, Iranian oil imports to Germany were virtually zero, according to statistics published on the website of Germany's Federal Office of Economics and Export Control. In February, Iranian oil imports to Germany were around 31,000 metric tons, according to that data. In 2011, Germany imported around 821,000 tons of crude oil from Iran, out of a total of 90.52 million tons of crude oil imports.

Reuters News reported that, U.S. President Barack Obama's bid to dampen the influence of oil speculators by having regulators set trading margins could backfire, potentially making prices even more volatile and leaving crude dominated only by those with the deepest pockets. Under Obama's request to Congress, the Commodity Futures Trading Commission (CFTC) would determine how much speculators need to pay to trade U.S. crude oil futures, in theory increasing the amount when prices move too far, too fast. But economists and traders cautioned that pushing smaller investors out of markets would only hand greater influence to the largest hedge funds and Wall Street banks. Ultimately, there may not be enough traders left to do business with oil producers and consumers looking to hedge their needs.

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